EUR/USD Forecast: Struggles to advance above 100-day SMA
|- EUR/USD advances for the fourth day in a row but loses upward momentum.
- Skepticism surrounding US-China trade negotiations continued to weigh on the dollar.
The EUR/USD pair has advanced slightly on Tuesday and is headed for its fourth daily gain in a row, as the dollar remains weak amid increasing skepticism on a positive outcome of the United States-China ‘phase one’ partial deal.
On Tuesday, media reports suggested that trade negotiations have stalled, weighing on market sentiment and favoring risk-off trades. Later in the day, US President Donald Trump said that he would "just raise tariffs" if the US does not strike a deal with China. He added that "China is going to have to make a deal."
On the data front, the US housing sector showed signs of improvement in October, as Housing Starts expanded 3.8% versus 0.6% expected, and Building Permits surpassed estimates expanding 5.0%. The Federal Reserve will release the minutes of its latest monetary policy minutes on Wednesday, while the European Central Bank will publish theirs on Thursday.
EUR/USD short-term technical outlook
From a technical view, EUR/USD holds a positive short-term perspective, with indicators advancing above their midlines, although the RSI is approaching overbought levels, limiting the upward potential for the next hours. In the daily chart, the pair continues to trade just below the 100-day SMA (1.1092) and a breakout is needed to improve the daily perspective. Above this latter, the EUR/USD could pick up bullish momentum with the next resistance seen at 1.1175/77, where October’s monthly high converges with the 200-day SMA.
On the other hand, as long as EUR/USD holds above the 1.1030 zone, the bearish pressure might remain contained. A breakdown, however, could threaten the short-term positive bias and send the pair to 1.1000 first, en-route to a retest of 1.0879, 2019 low.
Support levels: 1.1050 1.1030 1.1000
Resistance levels: 1.1092 1.1175 1.1200
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